The problem with most management, leadership, and business books is that many of them harp on the same self-evident points, overconfident in the usefulness of their prescriptions for would-be imitators. They tend to vastly underestimate the role of circumstance, luck, the nature of completion, and the effects of scale, among other things; falling prey to the many delusions described by Phil Rosenzweig in his incredibly important book, The Halo Effect.
The main problem Rosenzweig describes in the book is that attributes we tend to think cause great performance (culture, leadership, etc.) are often just things that are attributed to companies we already know are high-performing. There’s a Halo around everything they do. How many current high-fliers would ever be described as having a bad culture, or bad leadership? It would be nonsense to say it. Thus, we run into a recursiveness problem. High performing companies have a great culture, and great culture is defined as the attributes that cause high performance. In other words, when you ask someone if Apple has a great corporate culture, they will tell you it does. (And it’s an extremely successful company, so of course it does.)
But when we try to pinpoint which aspects of Apple’s culture make it more successful than its peers, and which would be predictive of success at other companies, we run into a difficult problem. The Halo Effect tells us that we will find a lot of false positives. The attributes we think are causal of success are the same ones we often deem causal of failure when company performance deteriorates. This is the strategy paradox. Read more.
